Net neutrality denies economic reality

The political left is very vocal in their criticism of science deniers. After all, the denial of reality ultimately harms humanity. Unfortunately, the left has a similar blind spot when it comes to regulation. Economic fundamentals also have a claim on reality, a claim we ignore at our peril.

This blind spot is on stark display over so-called net neutrality rules. By forbidding Internet bandwidth pricing to reflect economic costs, they are engaging in a form of science denial. Federal Communications Commission (FCC) Chairman Ajit Pai is absolutely right in his efforts to undo these delusional and ultimately harmful Obama-era rules.

The Internet is unlike anything that came before it. Unlike its heavily regulated precursor, the telephone network, switching is accomplished by grouping information into packets. Thanks to their complex internal structure, packets “know” what other packets they belong with, where they came from, where they are going, and what to do if they get lost. The packets that make up this article probably took different paths around the country to reach your screen. You neither noticed nor cared.

That’s because the Internet is a “bottom-up” system. Online information flows using well-defined protocols, widely known and available to all. These protocols are the only laws of the Internet that really matter. Under these laws, all packets are equal.But equal does not mean the same. Take those packets from that email you’re writing. Once you hit send, you don’t care if they take a few microseconds or a thousand times longer. Your boss will never notice. On the other hand, if some of them arrive out of order, garbled, or don’t get there at all, she’ll get mad pretty fast.

Other packets might be from that video you’re streaming. There are billions of them, so if some get lost before they hit your eyes and ears, you’ll never notice. But if their timing is even slightly off, you’re going to notice jitter and sync problems, and you’ll hate it. You’ll hate it so much you’ll write a nasty comment about your horrible internet provider. Then you’ll post it to Facebook.

Internet service providers (ISP’s) know this. That’s why they treat packets differently. For packets that need speed and reliability, your brain requires a higher standard of service. Giving you that takes more hardware, more bandwidth, more resources, and more energy. In other words, more money.

Think of it this way. Suppose you were replumbing your house for more water at higher pressure. Would you think it unreasonable if a plumber charged you more to replace your skinny PVC pipe with a big copper one? Would it be extortion for your water company to charge you more for higher pressure, because they had to build a bigger water tower? Should prices reflect reality, or make-believe? That’s really what net neutrality is all about.

Net neutrality advocates deny economic reality. They want to legislate it out of existence. They believe banning market pricing will have no consequences other than ISP’s making less money. Presumably, they think that’s just dandy.

But where exactly do they think telecom networks come from? Telecom trees? Telecom fairies? Or capital investments made by telecommunication companies? Communications networks are brought into existence because of private property and the profit motive. These two fundamental facts of economics will not disappear simply because the left doesn’t like them.

Sure, plenty of big-name companies support net neutrality. But if a corporation thinks regulation will improve its bottom line, what else should we expect? Companies who provide content that requires a higher quality of service will hate to pay more if they think regulation can enable them to pay less. But that doesn’t make them right. This is exactly the kind of business-to-business transaction that the marketplace can best sort out. Surely the left doesn’t need to be reminded just because corporations support something doesn’t make it a good idea.

It is also unrealistic, if not downright delusional, to expect regulation to produce the results its advocates want. Regulation provides opportunities for rent-seeking and regulatory capture, where companies use the political process to get benefits they couldn’t earn through market competition. These benefits can and have included special privileges (like the monopoly franchises cable companies enjoy) that exclude competition, as well as legally guaranteed profits. This is the exact opposite of how capitalism should function.

The present success and incredible innovations of the Internet have been made possible through the dynamic interactions of content providers, network providers, and consumers, all experimenting and negotiating in the marketplace to see what works best. Those processes must be allowed to continue unhindered, not crippled by wishful thinking.

All Internet packets are not created equal, because you and I want it that way. Net neutrality denies this reality.

Barry Fagin is senior fellow in technology policy at the Independence Institute, a free market think tank in Denver. He holds a Ph.D. in computer science from the University of California at Berkeley. He was a successful plaintiff in the Supreme Court case Reno v. American Civil Liberties Union, et al, which challenged parts of the Communications Decency Act of 1996 as unconstitutional. For his work in securing First Amendment protections for the emerging Internet, Dr. Fagin received the ACLU National Civil Liberties Award.